Asian equity markets kicked off the week on a strong footing, buoyed by positive momentum from Wall Street and a surge in technology shares. Investor sentiment remained upbeat despite significant volatility in currency markets, where the Japanese yen tumbled to unprecedented lows against major counterparts.
Regional Markets Post Solid Gains
Major indices across the Asia-Pacific region traded firmly in positive territory. Japan's benchmark Nikkei 225 index jumped by 973 points, or 1.97%, to reach 50,480 in early trading. The rally was partly fueled by a sharply weaker yen, which is expected to boost the overseas earnings of Japanese exporters.
In South Korea, the Kospi index advanced by 1.88% to trade at 4,096. Hong Kong's Hang Seng Index edged higher by 0.11% to 25,966. Mainland Chinese markets also participated in the uptrend, with the Shanghai composite adding 0.63% and the Shenzhen index gaining 1.27%.
Trading activity was somewhat subdued due to a holiday-shortened week in many parts of the world. However, markets edged higher in anticipation of delayed US economic data, with median forecasts pointing to robust annualised growth of 3.2% for the third quarter.
Yen Weakens Despite Rate Hike, Commodities Shine
The Japanese yen remained under intense selling pressure, sliding to fresh record lows. The currency touched 184.90 against the euro and weakened to 198.08 versus the Swiss franc. The US dollar rose to 157.67 yen, though traders exercised caution near the November peak of 157.90, wary of potential intervention by Japanese authorities.
This persistent weakness comes even after the Bank of Japan raised interest rates to a 30-year high of 0.75%, a move that ironically intensified selling pressure in government bonds. Market participants now await the minutes from the BoJ's policy meeting, due on Wednesday.
In the commodities space, silver continued its spectacular rally, hitting a fresh record high of $67.48 per ounce. This surge has lifted its year-to-date gains to nearly 134%. Gold also rose, adding 0.6% to reach $4,362 an ounce.
AI Optimism and Geopolitical Tensions Fuel Markets
South Korea's market surge was largely driven by optimism surrounding earnings from companies linked to artificial intelligence (AI). This tech-driven sentiment echoed the positive cues from Wall Street's tech sector.
Oil prices moved higher after geopolitical tensions escalated over the weekend. The United States intercepted a Venezuelan oil tanker and pursued another, marking the third such operation in less than two weeks. Consequently, Brent crude futures rose 0.7% to $60.88 a barrel, while US crude gained 0.7% to $56.89 per barrel.
The overall picture for Asian markets remains one of cautious optimism, supported by tech stocks and anticipation of strong economic data, but tempered by currency volatility and geopolitical developments affecting commodity prices.
